Farm Kids Fretting About FAFSA

The FAFSA Simplification Act, which passed in December 2020, is creating complexities that concern college-bound farm kids.

The previous FAFSA process didn’t take into account the value of family farms or the net worth of small businesses employing fewer than 100 people. But the new FAFSA includes a question regarding these values. Ultimately, how farm kids answer this new “Question #22” on the FAFSA form could reduce the financial aid they’re eligible for—and potentially make them less likely to attend college.

FAFSA on farms: The change in rules could change how much farm families have to pay for tuition: for example, an Iowa farm family making $60K a year would have paid $7,600 towards annual tuition under the old rules. Under the new framework, that number could jump to $41,000 annually. Some say the new FAFSA question doesn’t take into consideration the illiquid nature of farm assets compared to traditional investments.

Soundbite: “[The FAFSA asset question] fundamentally misunderstands how farm families operate, as the stream of revenue for crops and livestock varies significantly year-over-year, and assets cannot be cashed out to support a loan in the same capacity as traditional investments,” wrote 14 senators in a letter to the Education Department.

Firm on FAFSA: A spokesman for the Education Department noted that its job is to implement the Congress-passed bipartisan legislation, including changes that impact family farms. The agency has also noted that machinery debt and the value of farm families’ homes can be subtracted from the farms’ net worth.